Bitcoin refers to a completely new kind of digital currency that is characteristic of cryptographic keys and is decentralized to a network of computers that are used by several users and miners from across the globe. One thing which makes this digital currency stand out from the rest is the fact that it is neither controlled by any single organization or government. Frankly speaking, it is by far the first digital crypto currency that has managed to gain the public’s attention and has been accepted by the quickly growing number of merchants. One of the best things about bitcoins is the facts that: just like other common digital currencies, you can use it to shop for goods as well as services online. What’s more, you can now even use it in some physical stores which have organized their cash flow systems to accommodate this relatively new form of digital currency as a valid for of payment. In addition to all of the above, it is equally important to note that currency traders also have the ability to engage in the trade of this currency in bitcoin exchanges.
In spite of the above, it is equally important to not that there are countless other major differences between bitcoin and the well known traditional currencies such as the U.S dollar. Below is an overview of some of the major differences mentioned above to help you familiarize with all of the ins and outs of these two types of currencies. They include the fact that:a. Bitcoin does not have any form or centralized authority e.g. central bank, visa network, government or master card. As strange as it may sound, the currency’s peer to peer network for payments is somehow independent. More specifically, it is managed by users and the currency miners from across the globe. Interesting thing about the currency is the fact that: it is transferred directly between different users via the internet without necessarily having to pass through any clearing house (centralized authority). All of this simply translate into one simple thing, this is the fact that transaction fees are significantly low compared to other currency transfer options.
b. Bitcoin is created as a result of a process referred to as bitcoin mining. What happens in the transaction platforms is that the currency miners from across the globe employ the use of mining software and computers to break down and solve fairly complex bitcoin algorithms which in turn result into the approval of bitcoin transactions. Users are then awarded with transaction fees and consequently bitcoins which are generated following the successful solve of bitcoin algorithms.
c. There is a fairly limited amount of bitcoins presently in circulation. In fact, according to blockchain, it is estimated that there were around 12.1 million coins in circulation as at 20th of December 2013. Interesting thing about this digital currency is the fact that the difficulty of mining the coins (solving algorithms) gradually gets more complicated / complex as more and more requests for more bitcoins are generated. What’s more, the maximum amount set to be in circulation has already beeen capped not to surpass 21 million. As strange as it may sound, this limit is set not to be reached right until the year 2140. This in turn makes bitcoins even more valuable since more and more people will have an opportunity to make use of them.
d. There is a public ledger dubbed the “blockchain”. It serves to record all kinds of bitcoin transactions while at the same time showing each Bitcoin owner their respective holdings. This in turn has helped make sure that anyone can easily access the public ledger to verify any transactions. This has in turn made the digital currency not only transparent but also equally predictable. Above all else, the best thing about the currency is the fact that it has helped rule out the possibility of fraudulent transactions and double spending of similar bitcoins owing to the digital currency’s transparency.
e. The currency can either be acquired through bitcoin exchanges or simply through bitcoin mining
f. The currency is at the moment accepted in some brick and mortar retail outlets as well as in a limited number of online based merchants.
g. Bitcoin wallets are specifically used to store bitcoins, public addresses and private keys as well as in the anonymous transfer of bitcoins between different users.
h. Bitcoins are not in any way protected or insured by any government agency. This being the case, there is absolutely no way that the currency can be retrieved in the event the secret keys are for instance stolen by a hacker or lost as a result of a failed hard drive or even worse as a result of the closure of a bitcoin exchange. Simply put, any lost bitcoin associated keys are impossible to recover hence they run out of circulation.
Bitcoin will continue gaining more and more acceptance from the general public especially from the new generation of online shopper mainly because it allows users to remain anonymous while shopping for goods and services online. What’s more, the transaction fees are considerably lower compared to those of credit card payment networks. In addition to this, there is the public ledge which besides being accessible by anyone, also rules out the possibility of fraudulent transactions. Remember, the currency supply is capped at approximately 21 million and that the network of payments is independent and under the management and operation of users and miners and not the central authority as perceived by many. Frankly speaking, bitcoin is not a very great investment option taking into consideration the fact that it is extremely volatile and equally unstable. This is mainly attributed to the fact that a while ago, the price of bitcoin grew from as low as $14 to a record $1,200 before dropping again to around $632. The digital currency surged again this year following speculation from investors that it would quickly gain wider acceptance from the general public which would result into the increase of its price. The currency however, is on record for plunging 50% in December following china’s biggest Bitcoin operator’s announcement that it will not be accepting any more new deposits following a government directive. What’s more, according to Bloomberg, the Chinese central bank is on record for barring well established financial institutions as well as payment companies from handling any kind of bitcoin transactions.
Taking into consideration all of the above, it is clearly evident that biotin s will continue to gain more public acceptance overtime. However, its price will remain extremely volatile to sensitive news such as restrictions and regulations by the government most of which have negative impacts on its use.